Lynch Says Stadium Won't Cost City a Dime

John Lynch, chief executive officer of the Union-Tribune, addressed the Harvard Business School Club of San Diego Sept. 12. Whether the speech raised eyebrows among the Harvard crowd is not known. But a very reliable ex-U-T reporter heard a recording of Lynch's speech, and reported it today (Sept. 17) on the 919 Gang report, an online newspaper for more than 500 former and current U-T newsroom staffers. Some eyebrows shot up.

For one thing, Lynch asserted that a new downtown stadium for the Chargers "is not going to cost the City one dime." The National Football League will put in $500 million, claimed Lynch. But the NFL has not been putting that kind of money behind new stadiums. And most significantly, the NFL program is a LOAN arrangement. The money has to be paid back. Second, Lynch claimed that a joint powers authority will put in $200 million. Joint powers authority arrangements are between various governments. There has been talk of the County joining the City in the massive subsidy required for this stadium. "Public money is public money is public money, no matter what it is called," comments Bruce Henderson, former councilmember. And in the end, San Diego taxpayers will pick up the tab for a big part of any proposed stadium. If a San Diego subsidized stadium goes through, taxpayers will pick up at least two-thirds of the cost. That's what teams are extracting from other metro areas.

Lynch said "Deano [Spanos] was in my office last week saying, 'I don't want to move, but they're forcing me to move.'" Lynch told the Harvard business grads that he was working with County Supervisor Ron Roberts on a joint powers authority arrangement, and "I told Ron Roberts we would cover his back." (Presumably, watch the U-T's editorial page for this back-covering.)

According to the tape of his speech, Lynch said that U-T ownership has cash and no debt and intends to become a national media company, perhaps by buying a company coming out of bankruptcy. Lynch claimed the U-T's revenues are growing. He wants revenue to move from the current $150 million annually to $250 million. Then, Lynch took more potshots at the port, one of his favorite targets.

Comments

It looks like Lynch is projecting the new stadium will cost at least $700 million ($500 million which the city will borrow from the NFL and an additional $200 million from the County and or Port District). If the City allows Spanos to sell the Sports Arena and Qualcomm stadium sites to pay his share, then the cost of the new stadium could approach $1 billion. The retractable roof alone probably costs $100 million.

Oh yes, Burwell. Ever since the downtown money hoggers started talking about a retractable roof, I have assumed the cost will actually be $1 billion or more. But you can be certain the estimate fed to the public will be far lower. And it looks like the U-T will try to hoodwink the public into thinking the project will be revenue-neutral, or maybe profitable. Remember, Petco Park was supposed to be revenue neutral. It now costs the City $11 million to $20 million a year. Best, Don Bauder

If the U-T becomes a national media property, then other national media will report widely on the U-T's egregious propagandizing -- editorials on page one, the two Bushes among the six best presidents, etc. And you are correct to wonder if Lynch's speech indicates the U-T will try to claim that a stadium -- for which taxpayers are doomed to pay at least 66.6% -- will cost the City nothing. This is getting very interesting. San Diego may well be in the national negative spotlight once again, but worse than it was in the pension crisis. Best, Don Bauder

I doubt that those HBS alums fell for much or any of those claims. I think they are all MBA's and they do know their way around a balance sheet and some creative capital structures. (You may not like them or what most of them do when they have careers. In fact, with a sole exception, I don't remember any of them in a positive way. But they are bright folks and don't suffer fools gladly.) It would be interesting to get comments from one or more of those who attended the speech.

It would be a good idea to try to interview some of those who attended Lynch's speech. The problem is that, according to Lynch, it was supposed to be a closed meeting. So HBS grads might be reluctant to talk. I would hope that the attendees realized the scenario that could eventuate: 1. Lynch claims the proposed football stadium won't cost San Diego a dime. Does that mean that the U-T will take this preposterous position in its promotional efforts? Will citizens buy into it? 2. The U-T wants to expand nationally. Do you see how San Diego, if it buys into this claim, could be a national laughingstock, even more than it is now? Best, Don Bauder

Lynch said "Deano [Spanos] was in my office last week saying, 'I don't want to move, but they're forcing me to move.'"

Yes, I'm sure that Spanos has a gun held to his head at this point (eyeroll). I maintain that the only thing that has kept the Chargers from being in Los Angeles by now is the economic recession and the only thing that keeps them from moving there right now is the lack of economic recovery.

Those are the only things keeping them here? Could it be that nobody in LA is dumb enough to hand them a subsidized stadium? Why, if they went there they would have to pay market rent for the venue, and all the fat profit would be skimmed off by the landlord.

A story is going around this week that Anschutz wants to sell AEG, which is the corporate vehicle for LA's downtown plans. Supposedly, any sale will not affect those downtown plans...but people should never believe what companies say at such times. Best, Don Bauder

Related, just got word that AEG might be sold (pretty reliable source), which changes the game. I've stated previously (and endured ridicule for it), that Roski was the main player, and if the AEG sale is true, then it makes Roski a stronger candidate.

Roski has no money no financing refired, I said that 2-3 years ago when he had that pipe dream, would never happen, no one is going to lend a billion on a pro stadium deal today and these low life leeches will never ever not in a million years put their own skin into the game.